SEC stands pat on limiting brokers' voting rights to 20%

MANILA, Philippines - The Securities and Exchange Commission (SEC) is standing pat on its decision to limit brokers’ voting rights to 20 percent in the Philippine Stock Exchange (PSE) in spite of an injunction order issued by the Pasig Regional Trial Court.

The SEC received Thursday an order from the Pasig RTC allowing broker shareholders to vote to “the extent of their actual shares” during the PSE’s board elections scheduled today (May 1).

“RTC has no jurisdiction over SEC.  That is according to law. So they can’t order SEC by way of injunction. The commission en banc is standing pat on its order restricting broker voting rights. Its up to the PSE now what to do,” said SEC commissioner Juanita Cueto.

The RTC ruling was in response to the petition filed by stockbrokers, through the Philippine Association of Securities Brokers and Dealers Inc.  (PASBPI), for a temporary restraining order against the PSE, the nominations and elections committee (Nomelec) and the SEC, to prevent the exchange from implementing the revised 2010 Nomelec rules.

In particular, the PASBDI sought injunction against the SEC order requiring the PSE to limit starting this year, and every year thereafter, the voting rights of brokers to 20 percent in accordance with the Securities Regulation Code.

Under the new Nomelec rules, the number of brokers elected should correspond to 20 percent of brokers’ ownership limit “provided that non-brokers may elect additional brokers to the board as long as the total number of brokers would not exceed 49 percent of the board seats.”

This means only three brokers may be elected to the board while four board seats would be reserved for either broker-directors or non-broker directors. Eight seats would be reserved for non-broker directors, consisting of one president, three independent directors and four directors who will represent issuers, investors and other market participants.

Records show that around 38 percent of the PSE’s outstanding shares are still held by brokers.

The Securities Regulation Code states that brokers as well as any industry group may own only a maximum of 20 percent of the PSE.

However, since the brokers refused to comply with this ownership rule, the SEC has decided to just limit their voting power to 20 percent even though they own voting common shares amounting to more than 20 percent.

A total of 16 individuals are vying for the PSE’s 15-man board of directors. Based on the official list of candidates released by the PSE yesterday, five non-broker candidates representing investors and issuers have been nominated. They are Annabelle Chua representing Philippine Long Distance and Telephone Co., Anastacio Martirez of Liberty Telecom Holdings, Estrella Elamparo of the Government Service Insurance System and Amor Iliscupidez of the SMC Retirement Fund.

Omelita Tiangco of the Philippine Institute of Certified Public Accountants was also nominated as non-broker candidate representing other market participants

Nominated to run as independent directors are incumbent chairman Hans Sicat and PSE director Vicente Panlilio as well as former PSE directors Jose Luis Javier and Cornelio Peralta. Sources one the four would resign to give way to the new PSE president.